Those concluding words sent a chill down the spine of every Icelander watching on October 5, 2008 when then-Prime Minister Geir Haarde announced in a televised statement that the country was facing imminent economic collapse.

Accordingly, the Icelandic Krona fell to two-thirds of its value against the Euro, major banks closed and borrowers found themselves shouldering gargantuan interest rates. Icelanders took to the streets demanding answers and change from lawmakers at the national level. But when the capital Reykjavik also slipped into political disarray, the air was ripe for dramatic flair.

Enter Jon Gnarr Kristensson.

The musician, actor and comedian made international headlines in 2010 when his satirical "Best Party" won the race for mayor it had worked so hard to mock. Calling for free towels at public pools, a drug-free parliament by 2020 — as well as promising to break all of its promises — Gnarr's party became the fourth in four years to fill the mayoral position at a time when public disillusion was soaring.

But two-and-a-half years into his term and four years after the country's incapacitating economic collapse, Gnarr has overcome skeptics and confounded the political establishment in Reykjavik to become a symbol of Iceland's economic and cultural rebirth.

"You could probably say I'm the most dangerous man in Iceland," Gnarr told Errol Lewis on NY1's Inside City Hall in 2011 when asked if he could be considered a kind of deputy prime minister since the capital accounts for more than a third of the nation's population.

Gnarr's approach to his office has been marked by unabashed honesty, risky action and of course, humor: since taking office, the married father-of-five has appeared in drag at Reykjavik's gay pride festival, jumped into a pool in full suit at a press conference, and given a State of the City address with the help of a puppet. He has famously answered "I don't know" to questions other politicians may have winged or even lied about — a move the public has found as refreshing as it has disconcerting.

Jon Gnarr Kristensson in the 2011 Gay Pride Parade in Reykjavik (dalli58/Flickr)"I had no idea how fascinated people would be by that — it came as a total surprise," Gnarr told SmartPlanet.

"I understand how groundbreaking it is, but it shouldn't be like that. People should be allowed to say 'I don't know'. I mean, you can't know everything."

It has been precisely his political naiveté that put Gnarr in a position to leverage his creative strengths in devising new solutions to old problems. Though the learning curve was steep, the former punk-rocker has been responsible for some difficult decisions, including municipal layoffs and higher taxes. At the same time, Gnarr brings an innovative spirit to his vision for Reykjavik, a city still reforming itself amidst a national soul search.

"I think there is the potential to make Iceland into a testing ground for different ideas. You can experiment with democracy here, because the community is very small: the population is 300,000," Gnarr says. His Better Districts project has been one such municpal-scale example — a public forum geared at cultivating ideas for city improvements including meetings he personally attends and online voting.

Though his national political influence is technically limited, Gnarr says he would like to see more immigration to Iceland, as well as more innovative businesses approaching the country and its renewable energy resources — a process he says Apple and Google have already begun discussing with Reykjavik's energy company.

"We're finally coming up from [the crash], and there are endless possibilities, also in terms of culture, arts and design … and it only takes one person. [Music] was just crap here, and then came Björk, who completely changed the scene. Everybody realized if she can do it, we can do it."

Gnarr's disruptive attitude has been reflected in the country's slow and steady economic recovery: not only have many of those who lost their jobs in the financial collapse regained footing as entrepreneurs, but Iceland's export industries, including tech-heavy sectors, are finally seeing the return of highly skilled talent that had been siphoned off by the financial industry for a decade.

The turnaround is reflected in the numbers: Iceland has boasted seven quarters of GDP growth averaging 2.5 percent annually. What's more, the national deficit is down from 14 to 1 percent of GDP, and exports are up too.

"Overall I think we are just typical islanders with hopes and dreams," Iceland's Finance Minister Katrin Juliusdottir told the BBC. "You could also say that we have been a little bit arrogant in the past. Hopefully we are evolving into a more humble nation after what we have been through."

Gnarr on his role in that process:

"I hope, that my initiative, which has been hard work and agonizing and fantastic and horrific at the same time, and because it's so completely different from what I am... to be in this situation that I put myself in -- I hope it might be inspiring to others."

"But that's also the thing with creativity: you don't know where it's going to lead to."

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